Australian miner Macarthur Coal said on Monday its founder and top shareholder, Ken Talbot, had quit the board, a move that frees him up to play a key role in a looming bidding war for the $4.2 billion company.

Companies looking to build stakes in Macarthur include the world's top steelmaker ArcelorMittal, and the world's No.4 steelmaker, South Korea's POSCO, as they look to protect themselves against soaring coal prices.

Talbot holds 19.76 percent of Macarthur, which supplies steel mills with more than a third of the world's pulverised coal.

The second-largest shareholder is Chinese state-owned CITIC Resources Holdings Ltd, with 17.66 percent, which said this month it had not decided whether to sell or hold its stake.

ArcelorMittal bought 14.9 percent of Macarthur for $604 million in May and has been holding talks on an unspecified new transaction with the Australian firm.

Macarthur shares have more than doubled this year to A$20.73 on surging demand for coal from China and India and bubbling takeover talk. It sought a trading halt on Monday pending an update on the outcome of talks with ArcelorMittal by Wednesday.

Under local takeover rules, a shareholder wanting more than 19.9 percent of the company must make a full takeover offer.

Mr Talbot ... has advised that he is stepping down from the board because he believes that it is in the company's interest for him to do so, Macarthur said. It will also allow him greater flexibility to fully deal with his remaining stake.

POSCO said last week it had expressed an interest in buying a stake in Macarthur. A spokeswoman for the South Korean company said on Monday it had not yet received a response.

Macarthur spokesman Ian McAleese declined to comment on whether Macarthur was talking to any other companies besides ArcelorMittal.

He also could not comment further on Talbot's decision to quit the board. Talbot was out of the country and not immediately contactable. Talbot Group staff declined to say where he was travelling.

CITIC Resources had no immediate comment.

CITIC Resources, 11 percent owned by the Singapore government's investment arm Temasek Holdings, trimmed its stake in Macarthur earlier this year from 19.9 percent and has been expanding in oil, with a $1 billion acquisition of oil assets in Kazakhstan from its parent CITIC Group.

It is looking for more acquisitions in oil and other natural resources, its chief executive said earlier in June.

Macarthur Coal shares are so tightly held that there are few analysts who cover the stock. The chief investment officer of MIR Investment Management, which owns 3.2 percent of the group, according to Reuters data, declined to comment. ($1=A$1.05) (Additional reporting by Miyoung Kim in SEOUL and Tom Miles in HONG KONG, Editing by Ian Geoghegan)

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